The Impact of Internal Control Defects on Enterprises’ Commercial Credit Financing
DOI:
https://doi.org/10.54097/fbem.v8i1.6056Keywords:
Internal control, Material weaknesses of internal control, Trade credit financing.Abstract
Internal control indicates the quality of a firm’s financial information, and thus influences the trust relationship between the firm and its trading partner. This paper based on the previous analysis assumes that internal control quality would affect trade credit financing got from trading partner. Based on the sample of listed companies in the scope of implementation of internal control system from 2014 to 2017, this paper uses multiple regression model. This study reveals that there is a significant negative correlation between material weaknesses of internal control and the trade credit financing, which supports our hypothesis that a firm gets less trade credit financing when material weaknesses are found in its internal control system.
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